WARC unveiled the results of a study conducted in collaboration with iHeartMedia, the leading audio media company in America (NASDAQ: IHRT), on media consumption and audio investment in the US.
“The Investment Gap: Understanding the Value of Audio” highlights a divergence between consumption and investment. While 31% of the average consumer’s media consumption is now audio, only 8.8% of the average media budget is allocated to audio, and 25% of advertisers do not invest in audio at all.
According to the study, consumers of every generation are spending more and more time with audio content across radio, streaming and podcasts driven by audio’s ease and accessibility with the growth of wireless headphones and smart speakers adding to in-car, at home and at work listening.
Whilst WARC Data forecasts audio advertising spend in the US to reach $13.9bn this year, a double-digit recovery (+10.9%) from the pandemic’s 2020 cuts, the report highlights a large audio investment gap and the vast opportunity that exists in this mass reach and high engagement audio advertising market.
The study also identified four key types of advertiser attitudes towards audio:
- Audio Avoiders, the 25% of advertisers who do not invest in audio at all
- Broadcast Believers, who have seen the benefits of radio and are beginning to delve into more forms of audio
- Digital Only, those who have started to invest but are missing out on the full suite of audio options, particularly the 90% reach of broadcast radio
- Cross-Platform Champions, who explore audio’s full potential and continue to test, learn from and optimize their investments across platforms.
Furthermore, the study shows that audio is not a monolith. There are different and critical channels within the audio segment, and they play different roles in the minds of the consumers that advertisers should take advantage of.
Broadcast radio reaches 9 out of 10 Americans every month1 and is also the number one mass reach media among people ages 18 and over2. Podcasts are the fastest growing new audio platform and consistently deliver higher advertising conversion rates than all other digital channels, including social media platforms like Facebook, Twitter, TikTok, and even Google.3Forecasts from IAB/PwC show podcast ad spend is expected to grow rapidly in the US this year, up 60% to top $1bn for the first time.
The study also highlights the effectiveness of audio advertising at a local, regional and national level and across every stage of the funnel:
- Increases brand awareness: Audio delivers wide reach and high frequency. Nielsen Share Shift data shows that adding audio to a TV campaign improves performance by 20% whilst reducing costs.
- Creates favorability: Audience members have close relationships with their preferred stations and platforms, audio boosts brand familiarity and consideration.
- Sparks conversion: By delivering urgent calls-to-action at the most relevant times and places, audio motivates the actions and interactions brands require.
Whether brands tap into broadcast radio for its mass reach or its effectiveness or dive deeper into podcasting for its highest conversion rates, the study points out how right sizing the audio investment will drive real impact and growth for brands.